Infrastructure to the FORE

If you were from Chennai, you would like to savour these sweet some-things. If you are from elsewhere, don’t go green with envy.

When Chennai Metro was inaugurated earlier this year, a young woman was the engine driver. It was a national first.

BBC ranked Chennai as being amongst the five best cities in the world to live in.

In 2014, Lonely Planet named Chennai as one of the top 10 tourist destinations.

Chennai boasts of Asia’s largest clover-shaped flyover, largest bus terminus, largest IT park, largest library, the world’s second largest judicial complex and the second longest beach.

Chennai of-course belongs to Tamil Nadu, one of the most developed states in India.

The state boasts of several laurels. It has time and again been voted as a best performing state. In 2015, the ASSOCHAM ranked it as first in eight out of the nine parameters of development. These include economy, power, roads, health, industrial development, income and equality and overall development. Wow.

So, what attracts investors to the state?

May be the fact that Tamil Nadu has continuously been on the path of development. The state’s GDP has been growing at a handsome 9.2 per cent CAGR across the last 9 years. At 8.4 per cent, Tamil Nadu ranks second in contribution to India’s GDP.

There are several other reasons as well. Tamil Nadu is India’s most urbanised state, with 49 per cent of the population living either in cities or towns. At 20,000 MW, it has India’s largest power generation capacity and at 14.8 TBPS it has the longest telecom bandwidth. Believe it or not, the State constitutes 15 per cent of India’s major port capacity and has historically a very strong road network. There are 20 industrial parks and 28 operational SEZs placing Tamil Nadu third in India. Last, but not the least, with 300 multi-specialty hospitals the state is the country’s healthcare capital by a long distance.

The mushrooming of manufacturing industries, as also the arrival of KPO and BPO, have fuelled the high propensity growth of Tamil Nadu and of IT services in Chennai and Tier-2 cities. The state had more than 42,000 factories in 2014 including automobiles and components, textiles and garments, leather, chemicals and plastics, cement, castings and forgings, pumps and motors. Tamil Nadu attracted more than Rs. 44,400 crore in FDI in the last three years and signed 33 MoUs worth a total of Rs. 31,706 crore since May 2011. It ranks 3rd in cumulative FDI inflows into the country.

The Union Planning Commission ranked it among the top 9 states in this sector in 2014, thanks to the efficient clearance of finance and tax-related compliances; infrastructure and utility-related approvals; land and building-related approvals; environmental clearances and other business regulatory compliances.

On the flip side is the issue of antiquated labour laws. There is already a recommendation to introduce online system of renewing licences and documentation of standard operating procedures to increase transparency and efficiency of inspection under the Factories Act. Secondly, Tamil Nadu lags in product innovation and scaling up companies. Other challenges include power generation, land acquisition and lack of infrastructure beyond Chennai.

Fuelling the growth is Prime Minister’s Make in India initiative, which the state is taking very seriously. The various sectors that are targeted include automobile, infrastructure, textiles, electronic hardware and renewable energy.

Another aim is Vision 2023 that envisions Tamil Nadu to be the most prosperous state by 2023. Plans are on for several developmental projects including additional investment regions, industrial corridors and manufacturing zones; increasing capacity of ports and airports; OFC and broadband connectivity to every village; integrated multimodal transport systems; 2.5 million affordable houses, piped 24x7 water for all and world class universities. Once these happen, the state will look unrecognisable. These initiatives are expected to generate a per-capita income of USD 10,000 per annum and 11 per cent GDP growth over the next decade.

Infrastructure – Ports

Tamil Nadu has three major ports – Chennai, Ennore (Kamarajar) and Tuticorin. Chennai is among the oldest and the second largest ports in India with a capacity of 55.75 million tonnes or 2 million TEUs. Tuticorin is an artificial deep-sea harbour, the second largest port in Tamil Nadu and one of the biggest container terminals in India with a capacity of 33.34 million tonnes. Kamarajar Port currently has a capacity of 30 million TEU. The fourth large port at Kattuppalli near Ennore is in the private sector equipped to handle large number of containers. Chennai thus is unique in having three large ports!

These three ports currently handle approximately 20 per cent of India’s cargo in terms of tonnage, with an average of 17.9 per cent over the last 10 years. Cargo growth has more or less been in tandem with all India level, indicating that cargo traffic in Tamil Nadu is playing a major role in driving India’s trade. Tamil Nadu ranks second in project clearance along the coastline with 86 per cent, according to a report by Centre for Policy Research. These include proposals to build jetty, port, industry, etc. unlike in other states, which receive proposals for repair, reconstruction and renovation. This is also a driving force behind the rapid development of ports and increase in capacity in all major ports of Tamil Nadu.

Capacity increase is under progress in Kamarajar Port and Tuticorin. Tuticorin kicked off its expansion in 2014 and will soon see an increase in its handling capacity from 33.34 million tonnes to 85.73 million tonnes. This comes at a cost of Rs. 23,432 crore. Kamarajar port’s expansion plan defines upgrading cargo capacity from existing 30 million tonnes to 100 million tonnes by 2020-21. There are plans to set up a 100 acre Free Trade and Warehousing Zone.

All these expansions are planned to make the ports in Tamil Nadu facing stiff competition from neighbouring states highly competitive in terms of cargo handling and efficiency.

Infrastructure – Transport

Tamil Nadu has one of the strongest road networks in India with 101,300 km of surfaced roads. The total length of all roads add up to 230,000 km. The length of surfaced roads has increased by 50 per ceent over the last 10 years, but disproportionate to the whopping increase of 160 per cent in number of vehicles plying on these roads. Road density is 177km per 100 sq.km, indicating how well connected the places are. However, the narrow and unmaintained roads are a serious cause of concern.

The First Tamil Nadu Road Sector project was aimed at upgrading 724 km and maintaining 1030 km of the road network. Several initiatives were introduced including road safety policy, road accident database system, road safety fund and black-spot improvement. The project was successful as fatalities from road accidents fell from 19 per cent per 10,000 vehicles in 2003 to 11 per 10,000 vehicles in 2012; poor roads reduced from 35 per cent to 8 per cent and roads with less than 2 lanes reduced from 60 per cent to 38 per cent.

Recently the state and Central governments inked an agreement worth USD 300 million with the World Bank for upgrading the road network under the Second Tamil Nadu Road Sector Project. This will include upgrading capacity, quality and safety of 1175 km of Tamil Nadu’s core road network and the institutional capacity of the highways department through improved policies, operational systems and procedures. Tamil Nadu’s Vision document also describes upgrading 20,000 km of roads over the next 10 years.Further, the Indian government has identified the East Coast Road (ECR) connecting Kanyakumari and Chennai as a part of the Bharat Mala road- networking project. The Bharat Mala project aims at connecting all untouched areas to boost development and economic activities.

The government floated the Tamil Nadu Transport Development Finance Corporation Ltd. (TDFC) as a NBFC in 1975 to collect funds from the public for financing of state transport undertakings (STU). The funds are given to STUs and are used by them for normal operations, replacement of buses, capital works, etc. This initiative has made Tamil Nadu’s intra-state bus transportation service among the best in India.

Good roads will drive improvement in logistics services and quicker transportation time. An efficient infrastructure will ensure the state remains competitive in every aspect of its development plan.

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